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America’s great stock market conundrum

Second-quarter hedge fund letters weigh in on whether the bull market in shares is on borrowed time
America’s great stock market conundrum

“The market predicts the economy; the economy does not predict the market,” wrote Ben Miller of Miller Value Partners in his 10 July letter to investors. This simple truth, he argues, is the problem with those who believe US stock prices have become detached from reality.

Annual economic growth and stock prices have only had a correlation coefficient of .09 from 1930 through to 2019, a stat Mr Miller quotes to make his point that investors pay for what they think a company can make in the future, not how it is doing now.

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